2008/05/15 by Lawrence H. White · 3 citations
Economics, Econometrics and Finance · #Economic Theory and Institutions #Economic Theory and Policy #Banking stability, regulation, efficiency
paper · doi:10.1111/j.1538-4616.2008.00134.x
openalex publication_date 2008/05/15 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
Contrary to some accounts, the Hayek–Robbins (“Austrian”) theory of the business cycle did not prescribe a monetary policy of “liquidationism” in the sense of passive indifference to sharp deflation during the early years of the Great Depression. There is no evidence that Hayek or Robbins influenced any “liquidationist” in the Hoover administration or the Federal Reserve System. Federal Reserve policy during the Great Depression was instead influenced by the real bills doctrine, which (despite some apparent similarities) was diametrically opposed in key respects to Hayek's norms for central bank policy.